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Employers Pad Paychecks With Range Of Benefits Packages and Extra Perks

Benefits that a company or government entity offers its employees are all important and highly competitive factors in attracting and retaining a quality work force.

Kelly Moore, founder of Irvine-based Moore Benefits Inc., a benefits consultancy with clients in San Diego, says employers aren’t legally required to provide benefits. But she quickly adds, “They pretty much have to if they want to attract employees.” And the federal health care reform package, she says, will require that by 2014 businesses with 50 employees or more must provide health care benefits to employees or face a fine of $2,000 per worker per year.

Meanwhile, most people have noticed that employer-provided health care benefits seem to get more expensive every year. Moore cites several factors driving up costs.

“It’s really not so much risk-based as it is the higher costs of technology and drugs,” said Moore. “Legislation has required that carriers provide more areas of coverage, and in California, hospitals have to retrofit to comply with earthquake standards, which costs an estimated $2,000 per bed. And we have an aging population. We are not a culture that has focused on health and wellness.”

That means more and more expensive doctor visits, which escalate costs.

Here, the San Diego Business Journal takes a look at benefits packages offered by three different types of employers in San Diego: A public company, Cohu Inc.; a nonprofit organization, Scripps Health; and a government agency, the city of San Diego.

Public Company: Cohu Inc.

Poway-based Cohu is a publicly traded company with 640 employees, and all but 120 of the staff work locally, says Denise Logue, the company’s benefits analyst. The median age of the work force is 48. It is the parent of four companies: Delta Design, which supplies semiconductors for microwave communications and TV cameras; Rasco GmbH, a chemical testing equipment supplier; BMS, which manufactures microwave communications equipment and offers support service; and Cohu Electronics, a designer and manufacturer of closed-circuit TV systems.

The company provides employees with three medical plan options: one health maintenance organization, or HMO, plan and two preferred provider organization, or PPO, plans, says Logue. The HMO option requires employees to visit doctors within Aetna Inc.’s network of providers. The PPO options let employees choose their own doctors, but by choosing an Aetna network PPO provider, they save money. Other coverage highlights cited by Logue include:

• Family coverage for workers costs $97.29 every two-week pay period, up $16 a month from last year. The HMO option covers most doctor visits with a $20 co-payment, but co-pays for specialist visits are $30. A $500 co-pay is required for hospitalization costs to be covered. A 30-day supply of prescription generic drugs is a $15 co-pay, while the co-pay for brand-name drugs is $30.

• The first PPO option has a $15 co-pay for doctor and specialist visits. An annual $250 deductible gets 90 percent of hospitalization costs paid. Co-pays for a 30-day supply of generic drugs is $10, and $20 for brand-name drugs.

• The second PPO option has a $25 co-pay for doctor and specialist visits. A $500 annual deductible gets 80 percent hospitalization cost coverage. The co-pay for a 30-day supply of prescribed generic drugs is $10, and $20 for brand-name drugs.

• Vision coverage is offered, and dental care is a newly offered coverage. Life, disability and personal accident coverage is also provided by the company.

• Cohu offers a 401(k) retirement savings option. Last year, the company suspended its matching contributions. When in place, it had provided 100 percent matches for contributions up to 4 percent of an employee’s pay. Deferrals above 4 percent were not matched. Employees can invest their 401(k) savings into 26 different funds, including 10 life cycle funds, which allow for mutual fund investment shifts according to risk recommended for different stages of life.

Nonprofit: Scripps Health

Scripps Health is a nonprofit health care provider with four acute-care hospitals on five campuses. More than 11,000 of its 13,250 employees get discounts in its health care benefits packages by participating in its far-reaching wellness program. The average age of its employees is 44. It has 2,600 physicians and 19 outpatient facilities throughout San Diego County, says Bob Melendy, Scripps Health’s Human Capital Services executive.

Self-insured, Scripps provides benefits for both full-time and part-time employees. Participants in its four-year-old wellness program, which is designed to keep health care insurance costs down, says Melendy, can earn $40 a month in wellness credits. Coverage of a single employee with no dependents costs $40 monthly. Family coverage costs $196 monthly, but wellness credits will deduct $40 from that cost.

Co-pays at Scripps have stayed the same for the past five years, says Melendy. They are $10 for a doctor’s office visit, $30 for a specialist visit, $35 for urgent care. A $150 emergency room co-pay is waived if the employee is admitted to the hospital. Chiropractic and acupuncture visits have $15 co-pays. A 30-day supply of generic prescribed drugs has a $5 co-pay, and a 90-day supply has a $10 co-pay. Brand-name drugs for 30 days and 90 days have co-pays of $30 and $60, respectively.

• Employees can choose from two medical care insurance options, a self-insured exclusive provider organization, aka an EPO, or self-insured PPO.

• Dental coverage comes with the option for network or out of network coverage. Long-term disability coverage is offered for disabilities longer than six months, but is available for three months or longer for directors or higher-level executives.

• Employees can also have a pre-tax payroll deduction to be used for nonreimbursed medical expenses.

• Voluntary plans offered to employees at an additional cost include life insurance and accidental death and disability coverage. Long-term care and critical illness insurance plans are also available for an additional fee. Others offered are a critical universal life plan with the ability to grow its cash value, short-term disability, and a tax-deferred annuity retirement savings with various investment options. Another option is a 401(a) retirement savings plan, which covers full- and part-time employees after six months of service. Employees earning $80,000 or less per year can contribute up to 6 percent of earnings. Those earning $80,000 or more can contribute 3 percent of earnings. Scripps matches dollar-for-dollar up to 3 percent of contributions to a maximum of $5,400 annually. That is based on a three-year vesting schedule when the employee works at least 1,000 hours in a year.

• Other perks offered include a list of benefits Scripps dubs as “unique.” They include 30 percent discounts on public transportation costs, on-site day care at discounted rates and six free 15-minute massages annually by in-house licensed massage therapists, entertainment discounts and pet insurance.

Government: City of San Diego

The city of San Diego has 9,800 employees, 9,000 of which receive benefits. The average age of employees is in the mid-40s, says Valerie VanDeweghe, the city’s deputy director of risk management. Employees choose from several health insurance options, but not all of them buy health insurance. Kaiser Permanente is the most commonly bought plan, and is chosen by 35 percent of city employees. Sharp HealthCare and Health Net offer alternate coverage plans. Currently, coverage with Kaiser costs employees $141.73 every two weeks for a family plan, but in July will increase 5 percent to $148.81 through mid-2011. Rates vary according to which labor union an employee belongs to.

“We’ve averaged about 9 percent increases (in annual benefits costs) over the last few years,” said VanDeweghe. This year, however, “Kaiser is up 5 percent, but that would have been 9 percent if we hadn’t saved by increasing co-pays.”

Co-pays for prescribed drugs will increase from $10 to $15 for the generic option and from $20 to $30 for brand-name drugs. Doctor visit co-pays will increase from $10 to $15, says VanDeweghe.

Vision and dental plans are also offered. Depending on an employee’s hiring date and bargaining unit, says VanDeweghe, some individuals are required to participate in a 401(a) plan as a replacement to the Social Security system, since the city doesn’t participate in the federal retirement savings plan. Contributions are matched 100 percent by the city, and can be put into a variety of investment options.

Employees are part of the San Diego City Employees’ Retirement System, started in 1927 by the city, and later joined by the San Diego Unified Port District and the San Diego County Regional Airport Authority.

The city provides members of its retirement system with contributions based on a percentage of their salaries. To ensure employees will save sufficient retirement funds, the plan calculates suggested contribution amounts based on a standard formula.

The city also offers all employees two optional retirement savings plans, a 401(k) and a 457. Both allow employees to put a portion of their salary into a savings account that defers taxes on interest until the accounts are paid out to the employee.

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